(April 18) – “Portfolio managers of some hard-hit small-cap growth funds had a new mantra on Monday: Size counts. It should come as no surprise that many of the funds with the heaviest weightings in small-cap technology names took the hardest hits in Friday’s market meltdown. Some had one-day losses of more than 20%,” writes Ilanna Polyak for TheStreet.com today.
Managers of some of the hardest-hit funds said Monday they have a newfound love of some of the larger-cap names in the technology sector, like Cisco and Sun Microsystems.
“The tape is telling us that big is beautiful,” says Don Luskin, portfolio manager of the OpenFund, who was busy adding to his positions in Intel and Cisco on Monday.
Luskin’s fund declined 44.3% from the March 10 peak of the Nasdaq Composite index through Friday. His fund, which provides real-time tracking of its portfolio on its website, owns such stocks as biopharmaceutical firm Abgenix and Internet infrastructure player InfoSpace.com, which declined by 62.7% and 60.2%, respectively, from March 10 through Friday.
The renewed desirability of large-cap tech stocks was reflected in Monday’s recovery of the Nasdaq, up 218 points, and the Dow Jones industrial average, up 277 points. Cisco, for example, surged 16.6%, Texas Instruments rose 17% and Sun Microsystems was up 11%.
Even more telling was that the Nasdaq 100, an index of the biggest stocks in the Nasdaq, was up 10%, while the Russell 2000, an index of small companies, rose by only 1.2% on Monday.